Environment law- case law update

Waste

Local residents in Hampshire contacted the Environment Agency to report an increase in the amount of traffic travelling down narrow country lanes. The Agency carried out surveillance of the site, over which time it observed a skip of unauthorised waste being dumped at the site. The site was licensed to accept waste soil and construction and demolition waste, but other materials including wood, plastic bags and pipes, had also been dumped at the site. Following further investigations, it was also found that TJ Landfill had breached its licence conditions by failing to keep accurate records of tipping at the landfill. TJ Landfill found that some of its employees had taken cash payments for allowing unauthorised waste to be tipped at the site and that not all employees had kept records in the site record book. TJ Landfill was found guilty and fined £24,000 under the Environmental Protection Act (section 33(6). Although there had been no deliberate dishonesty by the Company, the Environment Agency pointed out that the lack of awareness by the management of the site could have led to environmental harm.

(TJ Landfill v Environment Agency
(8 October 2003) Magistrates’ Court (Ends Report, October 2003, Issue Number 345)

Durham County Council and Darlington Borough Council had been in a long running dispute over the responsibility for a contaminated landfill site, which had been in use between 1978 and 1984. In 1993 Durham County Council bought the site with the intention of cleaning it up and then selling it for agricultural purposes, but following a local government reorganisation in 1997, wanted the former landfill site to be handed over to its sister authority arguing that it came within Darlington Borough Council’s jurisdiction. Councils affected by the reorganisation in April 1997 were supposed to agree between themselves how to split up property and liabilities (See The Local Government Reorganisation (Representation of the People) Regulations 1997 and The Durham (Borough of Darlington) (Structural Change) Order 1995). However, Durham County Council and Darlington Borough Council could not agree on how assets and liabilities should be split, so the dispute went to arbitration. Durham County Council argued that the site, which has a negative value due to the substantial costs involved with cleaning up leachate and gas emissions, should have been taken on by Darlington Borough Council as it came within its administrative area. Darlington Borough Council, on the other hand, argued that Durham County Council should have been responsible for the site’s maintenance as it was the owner of the site, and that Durham’s interpretation of The Local Government Reorganisation (Representation of the People) Regulations 1997 would have an unjust and unfair impact which could not have been intended by Parliament. The Court held that the heavily contaminated Creebeck landfill site remained Durham County Council’s responsibility, accepting Darlington’s argument that the disused land was “surplus land” which was not required by Darlington Borough Council. Durham retained five sixths of the former landfill site at Creebeck. Durham was ordered to pay the legal costs involved in the Creebeck dispute.

(Durham County Council v Darlington Borough Council
(6 November 2003) High Court (EGI News, 23 October 2003)

Sewerage

Mr Marcic lived in an area that had been affected by flooding since 1992: his own garden had been flooded 17 times since 1992 by rainwater and sewage from the company’s sewers. Whenever there was heavy rain, the surface water sewer serving the property became overloaded as a result of the volume of water entering the surface water sewers higher up the catchment area. On such occasions Mr Marcic’s house, which was at the low point of the drainage system, suffered from flooding of surface water and back flow of foul water. Mr Marcic had approached Thames Water Utilities Limited, the statutory sewage undertaker for the area, in order to rectify the problem, but no action had been taken. The Water Industry Act 1991 sets out the statutory duties of water undertakers and sewage undertakers. In 1998 Mr Marcic began proceedings against Thames Water seeking an injunction restraining Thames Water Utilities Limited from permitting the use of its sewage system in such a way as to cause flooding to his property, and a mandatory order compelling Thames Water Utilities Limited to improve the sewage system. The High Court held that the effect of sections 18(8) and 22 of the Water Industry Act 1991 was that an individual could not bring a claim that relied on an allegation of breach of statutory duty under section 94 of the Water Industry Act 1991. Mr Marcic appealed, and the Court of Appeal held that Mr Marcic had a valid claim under the common law of nuisance and under the Human Rights Act 1998 as Thames Water Utilities Limited had failed to ensure that its scheme of priority had struck a fair balance between the competing interests of Mr Marcic and other Thames Water Utilities Limited customers. Thames Water Utilities Limited appealed the decision. The House of Lords held that Thames Water Utilities Limited had not been guilty of causing a nuisance when sewage flooded Mr Marcic’s garden and there had been no infringement of the homeowner’s human rights. It said that the common law of nuisance should not impose on the defendant obligations inconsistent with the statutory scheme imposed by the Water Industry Act 1991 as this would run counter to the intention of Parliament. Thames Water Utilities Limited had no control over the volume of water entering its sewage system and it would be surprising if Parliament had intended that whenever flooding occurred, every household whose property had been affected could sue the appointed sewage undertaker for an order that the company build new sewers or pay damages. In fact it seemed to be the case that the intention behind setting up the enforcement scheme under the Water Industry Act 1991 was to ensure that individual householders should not be able to launch proceedings in respect of the failure by sewerage undertakers to build sufficient sewers. The House of Lords also held that the claim brought under the Human Rights Act 1998 was ill founded. Thames Water Utilities Limited’s scheme was, overall, compliant with the European Convention of Human Rights and Fundamental Freedoms. In considering questions of general policy under the Water Industry Act 1991, a balance had to be struck between the interests of the individual and those of the community as a whole. Note that although Mr Marcic was not successful in obtaining an injunction or damages, Thames Water Utilities Limited has carried out works to protect his home and others in the area from future flooding. There was concern in the industry that if Thames Water Utilities Limited had lost its House of Lords appeal, there could have been a host of other sewer flooding claims against water firms, which in turn could have led to water companies seeking permission from industry regulator Ofwat to raise bills to meet potential claims.

(Marcic (Respondent) v Thames Water Utilities Limited
(Appellants) (4 December 2003) House of Lords ([2003] UKHL 66)

Pollution

On 3 April 2002 Rhodia Consumer Specialities contacted the Environment Agency to report that 22 tonnes of polyphosphoric acid had leaked from its storage tank at its plant at Oldbury. When the Environment Agency carried out an inspection of the plant the next day, it found that the leak had occurred four or five days earlier. It found that the plant had not been kept in good operating condition by Rhodia Consumer Specialties: the acid had leaked from an unbunded tank that had bolts which were made of mild rather than stainless steel. The acid had also passed through a concrete wall behind the tank and soaked into the soil and groundwater. The Court found that Rhodia Consumer Specialties had failed to maintain the plant in good operating condition and had failed to notify the Environment Agency of any potentially polluting release without delay. Both failures were contraventions of the conditions of the site’s IPC authorisation and therefore section 6 of the Environmental Protection Act 1990, and caused pollution to enter controlled waters contrary to section 85 Water Resources Act 1991. Rhodia Consumer Specialties pleaded guilty to all three offences and was fined £19,000. The Court took into account the fact that the Environment Agency had previously carried out an audit of the site in 1997, but had failed to ensure that best available techniques were being used in the plant, and had not placed a condition on Rhodia to make improvements to the tank, such as a bund and a sealed floor.

(Rhodia Consumer Specialities v Environment Agency
(29 September 2003) Magistrates’ Court) (Ends Report, October 2003, Issue Number 345)

Since the opening of the Sonae UK plant in Kirby, Merseyside, there have been several major environmentally polluting events related to the plant. In June 2003 a major explosion at the plant resulted in a release of 20,000 litres of a wax emulsion which overflowed a catch pit and then flowed into the Kirby brook. The Environment Agency carried out an assessment of the environmental impact of the incident and found that all life had been wiped out for at least 200 metres downstream of the works. Sonae UK refused to implement measures which the Environment Agency suggested, and a second discharge occurred four days after the first incident. A third spillage occurred later the same month. In August 2002 there was a spillage of a highly acidic toxic green dye, which again overflowed the catch pit. The pit was closed temporarily, during which time large amounts of chipwood were accumulated. Sonae UK sprayed the wood with water in order to suppress dust and keep the temperature down, but in doing so, encouraged the rotting of the wood. Leachate from the pile entered drains and then reached the brook, again resulting in damage to wildlife. Sonae failed to take action suggested by the Environment Agency, which could have prevented the leachate reaching the drains. Sonae UK was found guilty of causing polluting matter to enter the brook contrary to the Water Resources Act 1991 (section 85(1) and 85(6)) and fined £37,000. It was also required to pay costs of £3,150.

(Sonae UK v Environment Agency (2 October 2003)
Magistrates’ Court (Ends Report, October 2003, Issue Number 345)

Nuisance

Mr and Mrs Piper lived a short distance away from one of Europe’s largest chicken farms, in Cornwall. They claimed that since 1993 they had suffered with smells, noise, smoke and dust from the farm, which runs 24 hours a day. The county court judge visited the site in order to look at the farm’s operations, its location and the smells arising from the farm. It was held that the problems that the claimants were experiencing were not serious enough to justify court proceedings, and no injunction was given. The claimants appealed. The Court held that the smell arising from the chicken farm could constitute a nuisance. The county court judge had not considered fully the argument that the smell was not constant and was dependent upon the direction and speed of the wind, and the evidence that had been provided suggested that the smell was a continuing nuisance. The case was returned to the county court to be reconsidered.

(Piper and another v Clifford Kent Ltd (12 November 2003)
Court of Appeal (Auld, Clarke and Jacob LJJ) (EGI News,
13 November 2003)

Tax

The case concerned an appeal by Navydock Limited against an assessment to output tax made by the Commissioners of Customs and Excise. Navydock Limited had been set up as a special purpose vehicle in order to acquire the former Anglian Water Public Station site. The site had been marketed as a contaminated site with development potential and had previously been used as a landfill site accepting largely ash and domestic waste. Following a number of proposals from potential purchasers of the site, Anglian Water accepted Navydock Limited’s offer. The purchase price reflected the condition of the site. The contract was conditional upon Navydock Limited obtaining planning permission for the intended development of the site. Navydock Limited also approached the Environment Agency with a method statement setting out its decontamination plans. The applications took longer than expected and after 18 months Navydock Limited was in breach of the contract. The contract had allowed 18 months for decontamination of the site. However, Anglian Water recognised the difficulties involved and extended the time period allowed for decontamination. Eventually, the Environment Agency and Navydock Limited agreed that bioremediation would be the best way to clean up the site but the methodology was a high risk strategy for Navydock. Following further discussion between Navydock Limited and Anglian Water a collateral agreement was entered into according to which Anglian Water would pay the amount by which the decontamination costs based on a full clean-up of the site exceeded £560,000. Navydock Limited approved VHE Construction Plc to carry out the work following a tender process but heard nothing from Anglian Water, despite repeated reminders. Anglian Water attempted to renege on the collateral contract, then offered Navydock compensation in return for terminating the sale agreement. Subsequently, a settlement agreement was entered into between Navydock Limited and Anglian Water. The Commissions for Customs and Excise claimed that the payment was consideration for a taxable supply of services from Navydock Limited to Anglian Water (Navydock undertook to Anglian Water to engage contractors to undertake the remedial work required under the method statement, and in return Anglian Water agreed to pay Navydock Limited for that work to the extent that the cost exceeded £560,000), but Navydock claimed that the payment represented damages for misrepresentation by Anglian Water. The Court drew a distinction between a supply of services attracting VAT and a payment of compensation or damages that is exempt from VAT. It decided that the payment by Anglian Water to Navydock Limited was compensation because it was not possible to characterise the payment as made in return for any benefit given by Navydock Limited to Anglian Water. For a payment to be “consideration” for a “supply” for VAT purposes, there must be a corresponding benefit accruing to the payer. As Anglian Water was receiving no benefit, the Court reasoned that there was no consideration for any supply. The case was unusual in that in most cases the relevant VAT supply is the price paid for the acquisition of land.

(Navydock Limited (Appellant) v The Commissioners of Customs and Excise (Respondents), (18 June 2003) Court of Appeal (unreported))

Health and Safety

Stockport Metropolitan Borough Council owned a tower block consisting of 66 flats, adjoining an embankment next to which was a golf course. The Council also owned the embankment through which ran a high pressure gas pipe owned by BG plc. The Council owned a service pipe which also ran through the embankment and supplied water to the tower block. In 1992 Stockport Metropolitan Borough Council’s service pipe fractured, leaking water into the ground. The water saturated the embankment which collapsed, leaving the high pressure gas pipe owned by BG plc exposed. Debris was also thrown onto the golf course owned by Transco plc. Transco plc and BG plc sued in order to recover losses in making good the damage sustained as a result of the collapsed embankment. The High Court ruled that the Council’s use of the land was not ordinary and held the Council strictly liable under Rylands and Fletcher [1868] LR 3 HL 330. The High Court also held the Council to be negligent and liable in nuisance. The case went to the Court of Appeal which overturned the judgment of the High Court. The Court of Appeal held that the Council was not strictly liable as it was using the land within the ordinary course of the enjoyment of the land. The Court of Appeal also ruled that Stockport Metropolitan Borough Council was not liable in nuisance or negligence as the fracture in the pipe had not arisen through the negligence of the Council. The case proceeded to the House of Lords in order to consider the question of whether the Court of Appeal had been correct to hold that BG plc’s case did not come within the principles in Rylands v Fletcher and did not establish liability under any other head of nuisance. Stockport Metropolitan Borough Council argued that Rylands v Fletcher had been incorporated into the ordinary law of negligence following Burnie Port Authority v General Jones Property Ltd [1994] 120 ALR 42. The House of Lords held that Rylands v Fletcher had not been absorbed by the ordinary laws of negligence and was a separate head of liability for four main reasons: it was just for some offences to be based on participation in an activity rather than on fault (Cambridge Water Co v Eastern Counties Leather plc [1994] 1 All ER 53); there were important principles behind the strict liability rule, such as social accountability; there was only a suggestion to depart from Rylands v Fletcher in Cambridge Water; and replacing strict liability with a fault-based notion would lead to greater similarity to Scottish law but discrepancy with French and German law. The House of Lords pointed out that the rule in Rylands v Fletcher was applicable to specific circumstances only and did not apply in the present situation as Stockport Metropolitan Borough Council’s use of the land had not been extraordinary and unusual, and the water had not escaped from the Council’s land.

(Transco plc (formerly BG plc and Transco plc) v Stockport Metropolitan Borough Council: [2003] UKHL 61)